Equifax and TransUnion are our two credit reporting services in Canada. They each use proprietary formulas for calculating your credit scores. While most loans, lines of credit and credit cards have been reported for many years and likewise displayed on your credit reports; phone company accounts, such as Bell, Rogers, Kudos etc.) have not been displayed until very recently.

Today's blog is about The Affect of Your Phone Contracts on Your Credit Reports.

If you pay your phone account on or before the due date, the timely payment is reported to both Equifax and TransUnion. If you make your payment after the due date, then the late payment is also reported to both Equifax and TransUnion. Late payment on any account is a negative reflection of your borrowing character when reviewed by banks and lending facilities who rely upon the data in Equifax and/or TransUnion to make an underwriting decision.

I have spoken to Equifax directly in preparation for this article. It has been confirmed that any form of Revolving Credit, such as lines of credit and credit cards is considered the driver of your actual Credit Score. Two other types of credit being reported are Installment Credit such as car loans, personal loans of any kind, student loans, and Open Credit such as your cell phone contracts. While late payment of the Installment and Open credit sources does not directly affect your actual credit score, it is highly regarded and considered when an Underwriter is considering your credit application for approval.

There is a time when late or deliquent payment of your Open credit sources and Installment credit sources may have a negative impact on your credit score. If the account goes delinquent and is sent to a collections agency, this is reported on your Credit Report and your credit score will begin to trend downward.

If you know of anyone who has walked away from a cell phone contractual obligation, I would strongly urge them to investigate for themselves as to whether the company has registered a collections on their credit report. Even if it is believed they were in the right to do so. Having some form of writing from a cell phone company confirming the contract has been fulfilled and is now closed is a good practice when changing cell phone companies. Sometimes these writings are called a Full and Final Release.

In summary; Cell Phone Contracts and Accounts are now showing up on your Equifax Credit Reports and have been now for a few months. While these contracts and accounts have been reported for years, changes were made to Equifax to now show prospective lenders, to whom you have applied to for credit, your cell phone account contract payment activity.

If you or someone you know are behind or constantly late on cell phone bills, it has never been more important than now to get them caught up to date and a system put into place where the bills are paid on time and in full every month.

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Leslie Fallaise is the Broker of Record and Owner of Centum Mavin Lending Ltd. Having a combined 20 years experience in Lending and Real Estate Law she does the research for you. Your Professional Mortgage Consultant - Leslie Fallaise